This isn't a copyright case, it's a trademark case.
The issue is that some of the specific expressions of the elements may be extremely distinctive, and trademarked by a person (or company) for commercial use. In those situations, you can still use the element, but not the specific expression of that element that is trademarked because that specific expression is being used by another person for ongoing commercial activities. However, unlike copyright, trademarks die if they are not kept in relatively continuous commercial use, generally 3 years after last use.
For example: the Winnie the Pooh horror movie. The specific version of Winnie the Pooh in the animated films is trademarked by Disney. The version that is a serial killer wearing a costume is not. Disney didn't bother to try and stop the film. So, if you wanted to make versions of the Toy Story character that don't look like the animated versions, you'd be in the clear once the copyright expires.
But the Morgan and Morgan ad is different. They're attempting to use trademarked characters for their own commercial purposes. (And there's no clear parody of Steamboat Willie; in the original cartoon he causes a bunch of accidents that harm other characters including the character that would become Minnie, so what is the parody here?) Unless they've made a sizable donation to the judge's bank account, they have no chance of winning their motion as there is over a century of case law against. OTOH, given the current administration and the openness of his appointees to disregarding centuries of existing law, it's very possible that Morgan and Morgan expects to win this case.
As an aside, Morgan and Morgan is generally regarded as the worst of the large personal injury law firms. In cases in which other PI firms sued the same defendants, the M&M plaintiffs got the smallest settlements, because M&M settles as early in the case as possible (usually before discovery) as their business model is based on quick, cheap settlements and they'll put heavy pressure on clients to accept the low-ball offers to avoid having to spend the time or labor costs of going through discovery. There are many complaints of M&M pressuring their own clients, fraudulent billing, withheld settlements, dropped cases, and bait-and-switch fees. They're the most sanctioned law firm in the country...by a lot...
This is what's keeping me from working on my own "John Carter of Mars" game. The books (at least the first 5-6) are public domain, but Edgar Rice Burroughs, inc has John Carter, Dejah Thoris, etc., all trademarked, and can continue that indefinitely. I don't think it would be a slam dunk legal case, but it's enough to discourage me from trying (I've heard they are litigious).
The Winnie the Pooh books by A. A. Milne are no longer under copyright, that copyright expired. However, the Disney animations of Winnie the Pooh are still under copyright, and they have a distinctive style compared to the illustrations in the books. It's mainly about copyright, not trademarks.
The issue is that some of the specific expressions of the elements may be extremely distinctive, and trademarked by a person (or company) for commercial use. In those situations, you can still use the element, but not the specific expression of that element that is trademarked because that specific expression is being used by another person for ongoing commercial activities. However, unlike copyright, trademarks die if they are not kept in relatively continuous commercial use, generally 3 years after last use.
For example: the Winnie the Pooh horror movie. The specific version of Winnie the Pooh in the animated films is trademarked by Disney. The version that is a serial killer wearing a costume is not. Disney didn't bother to try and stop the film. So, if you wanted to make versions of the Toy Story character that don't look like the animated versions, you'd be in the clear once the copyright expires.
But the Morgan and Morgan ad is different. They're attempting to use trademarked characters for their own commercial purposes. (And there's no clear parody of Steamboat Willie; in the original cartoon he causes a bunch of accidents that harm other characters including the character that would become Minnie, so what is the parody here?) Unless they've made a sizable donation to the judge's bank account, they have no chance of winning their motion as there is over a century of case law against. OTOH, given the current administration and the openness of his appointees to disregarding centuries of existing law, it's very possible that Morgan and Morgan expects to win this case.
As an aside, Morgan and Morgan is generally regarded as the worst of the large personal injury law firms. In cases in which other PI firms sued the same defendants, the M&M plaintiffs got the smallest settlements, because M&M settles as early in the case as possible (usually before discovery) as their business model is based on quick, cheap settlements and they'll put heavy pressure on clients to accept the low-ball offers to avoid having to spend the time or labor costs of going through discovery. There are many complaints of M&M pressuring their own clients, fraudulent billing, withheld settlements, dropped cases, and bait-and-switch fees. They're the most sanctioned law firm in the country...by a lot...